Dan Walters

Dan Walters: Once again, workers’ compensation tinged with scandal

Dan Walters
Dan Walters

When the FBI conducted a years-long undercover investigation of influence-peddling in the state Capitol during the 1980s, agents posed as businessmen seeking special state treatment for a fictional shrimp-processing plant.

That sting operation snared the first batch of politicians and staffers, and in time-honored fashion, some who found themselves on the hook were offered deals if they would implicate others in wrongdoing.

A state senator took the offer, and in return for a relatively lenient sentence, wore a wire as a lobbyist for insurance companies, seeking a bill changing workers’ compensation law, offered him a bribe.

The senator wound up in a low-security prison in Lompoc, known colloquially as “Club Fed,” for a relatively short stretch while the lobbyist did his time at a prison in the Nevada desert, where he became known as “the judge” for mediating disputes among his fellow inmates.

No one in the Capitol was surprised that the multibillion-dollar system for compensating workers for job-related illnesses and injuries had become the centerpiece of scandal.

Even tiny changes in the system’s labyrinth of laws and administrative rules can mean many millions of dollars for its stakeholders – employers, workers’ compensation lawyers, labor unions, insurers, and medical care and rehabilitation providers.

The stakeholders joust constantly in the courts, in administrative rule-making proceedings and in the Legislature over who’s entitled to what and who pays what. Occasionally – about once a decade – the politicians gin up a systemic overhaul that’s always labeled “reform” by those who gain but always has some sore losers.

Just as it wasn’t surprising that the feds’ sting involved workers’ compensation two-plus decades ago, it was not surprising that a more recent federal sting – which followed the previous script closely – touched on the same issue.

Among other crimes, Sen. Ron Calderon is accused of helping the owner of a Long Beach hospital get many millions of dollars in extra payments for spinal fusion surgery on workers’ compensation patients by manipulating one of the many arcane rules governing the system.

The authorization was buried in a mammoth bill, signed by former Gov. Gray Davis in 2002, that purported to be a reform to reduce costs borne by employers.

Hospital owner Michael Drobot has pleaded guilty to federal charges of paying kickbacks to doctors to get patients, and Calderon awaits trial.

It’s an extreme example, but an example nonetheless, of how the welfare of injured workers is often the last consideration when high-powered stakeholders in the workers’ compensation system and politicians get together to decide how their disabilities will be treated.